Separating myth from reality: A guide to social grants in South Africa

In South Africa, few subjects elicit as much debate and opinion as the country's extensive social welfare programme. Does it indeed make people "lazy" and "dependent"? And is South Africa headed for a financial cliff because of it? We reviewed the research.

The number of social grants recipients in South Africa have increased exponentially over the past twenty years: from an estimated 4-million in 1994 to 16.3-million by 31 August last year. In recent years a growing chorus of voices have warned that the numbers are not sustainable.

Among them is President Jacob Zuma who said four years ago that government “cannot sustain a situation where social grants are growing all the time and think it can be a permanent feature”. Despite this, social spending has not decreased.

In fact, grant amounts have increased and ages of those who qualify have been extended. The Department of Social Development is currently considering extending the Child Support Grant (CSG) to age 23, partly because of the large number of child-headed households where older children take care of younger siblings.

With South Africa’s public finances under pressure the Minister of Finance, Nhlanhla Nene, has warned that he needs to tighten the country’s financial belt. South Africans will hear whether he has increased taxes, or cut state spending by curbing social grants for instance, when he delivers his maiden budget speech on 25 February.

What different social grants are there?

The South African Social Service Agency (SASSA) administrates seven long-term grants.

Grant for Older Persons (Three million recipients as of 31 August 2014). R1,350 per month for people over 60, R1,370 for beneficiaries older than 75. Previously men aged 65 or older and women aged 60 and older qualified for the grant. Now both men and women aged 60 and older quality. In order to access the grant, a recipient may not earn more than R61,800 a year or have a combined household income of R123,600 a year.

Disability Grant (1.1-million recipients). R1,350 per month for people who are unable to work because of disability. Recipients must be between 18 and 59, submit a medical assessment or report no older than three months, and may not receive another social grant.

War Veteran’s Grant (373 recipients). R1,370 per month for people who are disabled or older than 60 and who served in the Second World War or Korean War.

Foster Child Grant (548,000 recipients). R830 per month.

Care Dependency Grant (123,000 recipients). R1,350 per month to the main caregiver of a child with a permanent, severe disability. The applicant must submit a medical assessment report on the child’s behalf and earn less than R162,000 (if single) or R324,000 (combined income if married) per year.

Child Support Grant (11.5-million recipients). R320 per month to the main caregiver of a child 18 or younger. The applicant must earn less than R38,400 (if single) or R76,800 (combined income if married) per year.

Grant-in-Aid (93,800 recipients). R320 per month for people receiving the Grant for Older Persons, Disability or War Veteran’s Grant, and who require full-time care because of physical or mental disability.

Social Relief of Distress is a temporary grant awarded to people in dire need. It may be paid out in various circumstances, including to people awaiting payment of an approved social grant, or who have been affected by a disaster, such as severe flooding. The maximum amount allocated is R1,350 per month, issued for a maximum of three months.

Who qualifies for a social grant?

The applicant must be a South African citizen, permanent resident or refugee, and must live in South Africa. However, you don’t quality if you are already being cared for in a state institution.

You can apply at your nearest SASSA office. If you are too old or sick to apply in person you may send someone to apply on your behalf, or request a home visit. When applying you submit an identity document and fill in an application form in the presence of a SASSA officer, who will submit it for you.

For most grants the applicant’s income and assets are evaluated to ensure that social grants are only paid to people who earn too little to support themselves. This “means test” is done when the application is captured, using bank statements and government records. However, when the applicant is unemployed or does not have a bank account, as is often the case with people applying for the child support grant, they can submit a SASSA-approved affidavit as proof.

To receive the grant for older persons, war veterans or the disabled, a beneficiary cannot own assets of more than R891,000 (if single) or R1.78 million (combined assets if married). These grants are also paid on a sliding scale, which means that the more private income an applicant has, the smaller the government grant.

It takes about 21 days to hear the outcome of your application. If your application fails, you must be informed in writing and you may request that SASSA reconsiders its decision. Failing that, you may appeal to the Minister of Social Development.

If your grant is approved, you will be paid from the date of your application; foster child grants will be paid from the date of court placement. The grant money is loaded onto a SASSA card, although you may request to have it paid to a bank account. Your fingerprints will be taken during the card enrolment stage to prevent fraud.

According to SASSA spokesman Tshediso Mahlaku, the “recent introduction (in March 2012) of the finger biometric system in the payment of social grants has led to a significant reduction of fraud within the system”. By February last year, nearly 300,000 fraudulent grants had been cancelled.

What impact do social grants have?

Extensive research has been done on the impact of the social grant system. Studies consistently show that grants (particularly the child grant) are well targeted at very poor households, and that they “have been central to poverty alleviation over the post-apartheid years” – although they have had little effect on overall inequality in the country.

Research by the Southern Africa Labour and Development Research Unit (SALDRU) and the School of Economics at the University of Cape Town indicates that the size of the Grant for Older Persons is “sufficient to lift many households out of the poorest quintile”. In addition, a “quarter of the unemployed derive income support exclusively from the grant income of other members of their household”.

The majority of child grant beneficiaries (96%) are women, and a study by the Centre for Social Development in Africa (CSDA) at the University of Johannesburg shows that the grant has had an impact on women’s empowerment in very poor communities: “The [child support grant] enhances women’s power and control over household decision-making in financial matters, general household spending and in relation to child well-being.”

According to a child grant evaluation report by the United Nations Children’s Fund (UNICEF), the grant has a positive impact on school attendance and health care. An impact report using data from the same survey shows that the child grant significantly reduces adolescent risky behaviours, such as unprotected sex, alcohol use, drug use, criminal activity and gang membership. That is because teenagers are usually allowed some pocket money from the grant.

Research by the Department of Economics at Stellenbosch University indicates that the number of children whose parents reported that their child had gone hungry in the previous year declined from 31% in 2002 to 23% in 2005, thanks to the significant expansion of social grants.

However, the paper lists concerns that “few people now find it worthwhile to remain in the labour force beyond the inception age for the old age pension”.

Can South Africa afford its grants?

South Africa currently spends over 4% of its GDP on social grants. World Bank statistics from 2009 puts South African social expenditure on a par with Ukraine, but below Malawi and Ethiopia (about 4.5%) and far behind Mauritius (nearly 8%). This is still at the high end of the scale, with Jamaica (below 1%), Poland (just over 1%) and Argentina (1.5%) being much more typical.

There is concern over whether South Africa’s spending on social welfare is sustainable in the long term. According to research that has compared the government’s expenditure on social grants and civil service remuneration since 2008 with government revenue over the same period, these will absorb all government income by 2026 if current growth trends are not adjusted.

However, Professor Ingrid Woolard of the School of Economics at UCT, who specialises in researching social protection and poverty and inequality, disagrees that grants are not sustainable: “The Treasury has excellent models for forecasting the take-up of grants and the underlying demographic trends are not worrying. Indeed, grants as a percentage of GDP are not increasing so the system is very stable.”

Treasury’s long-term fiscal study shows that “the current level of social spending will be sustainable as long as the economy grows by 3% a year”, although it does provide a very narrow margin for additional spending. Higher economic growth is therefore necessary. However, the International Monetary Fund (IMF) forecasts economic growth for South Africa of only 2.1% for 2015 and 2.5% in 2016.

Myths and misconceptions

Many negative perceptions exist about social grants and their recipients, and a study by the Centre for Social Development in Africa (CSDA) at the University of Johannesburg shows that even beneficiaries themselves believe the stories. But how many are true?

“Grants make people lazy and dependent on the government”

Research by the Southern Africa Labour and Development Research Unit (SALDRU) based in the School of Economics at the University of Cape Town shows that “there is little empirical evidence” to support claims that people stop looking for jobs when they receive a grant. The CSDA report also supports research that “grant recipients do not wish to be ‘dependent’ on cash transfers and continue to place a high value on paid employment” and that they are “extremely motivated to get work and want to exit the welfare system as soon as they can”.

“The child grant increases teenage pregnancy”

A previous piece by Africa Check has shown the claim to be untrue as very few teenage mother actually access the grant.

“Parents claim grants for children who don’t live with them”

The CSDA report shows that the “overwhelming majority of beneficiary children [92.2%] lived with the caregiver in the household”.

“Recipients misuse grant money”

Although some people do misuse their grant, for example by abusing alcohol, the CSDA report shows that “[grant] monies are mainly used for food and some basic non-food items such as school fees and uniforms, health and transport”.